PRECIOUS-Gold steady but pressured by global growth woes, dollar

Reuters Staff

5 Min Read

* Dollar index hits nearly one-month high
* Physical gold buying picks up in Asia as prices slide
* Spot gold may fall to $1,750/oz -technicals
* Coming up: Germany, wholesale price index; 0600 GMT
(Adds details; updates prices)
By Rujun Shen
SINGAPORE, Oct 10 (Reuters) - Gold steadied on Wednesday
after three straight sessions of losses, although prices
remained near a 1-1/2 week low as a murky outlook for global
economic growth buoyed the dollar, putting pressure on bullion.
The global economic slowdown is worsening, the IMF said on
Tuesday while cutting its growth forecasts for the second time
since April. It also warned U.S. and European policymakers that
failure to fix their economic ills would prolong the
slump.
Spot gold was trading nearly flat at $1,762.62 an
ounce by 0655 GMT, just above a 1-1/2 week low of $1,759.94 hit
in the prior session. It dropped 1.4 percent over the past three
days -- its sharpest three-day decline in more than two months.
U.S. gold was also little changed at $1,764.60.
Stimulus measures by the U.S. Federal Reserve and European
Central Bank boosted gold last month, but the precious metal has
been trending lower this week in the absence of fresh catalysts.
"There is a huge requirement for the Fed to be extremely
accommodative and to up the dose of the liquidity lifeline that
the equity market is on," said a Hong Kong-based trader, adding
that gold could see a further mild pullback ahead of a Fed
policy meeting later this month.
"The positioning in gold is so long that it could use
something to take off that overhang in the market."
The net length in U.S. gold futures and options struck a
more than one-year high last week after seven straight weeks of
gains, U.S. Commodity Futures Trading Commission data showed
.
Technical analysis suggests spot gold could fall to $1,750
an ounce during the day, said Reuters market analyst Wang Tao.
A firm dollar, which hit its highest in nearly a month
against a basket of currencies, was also weighing on
gold. A stronger dollar makes commodities priced in the
greenback expensive for buyers holding other currencies.
The euro zone debt crisis continues to dent appetite for
riskier assets, with Spain resisting asking for a bailout and
German Chancellor Angela Merkel making no promise of further aid
to Greece as her visit to the country was greeted by angry
protesters.
PHYSICAL GOLD BUYING RECOVERS
Bargain hunters returned to the physical market, after gold
retreated about $30 from an 11-month high hit last week, dealers
said.
"We see physical buying when prices drop to around $1,760,
and scrap flow dried up last week," said a Singapore-based
dealer, adding that premium on gold bars has risen to as high as
80 cents an ounce above London prices from 20-40 cents last
week.
Holdings of gold-backed exchange-traded funds continued to
climb, rising to a record high of 74.76 million ounces by Oct.
8.
Investors should double the proportion of gold investment in
their portfolio on poor prospects of global economic growth,
said Gary Dugan, Chief Investment Officer for Asia and Middle
East at private bank Coutts, in an interview with Reuters.
In industry news, China, the world's top gold producer,
churned out 249.7 tonnes of gold in the first eight months of
the year, up 10.3 percent on the year.
Platinum group metals inched lower, although a labour unrest
in top producer South Africa continues to threaten supply.
"A lot has been priced in and the bar is now much higher for
news headlines to move prices," said the Hong Kong-based trader.
Precious metals prices 0655 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1762.62 -1.03 -0.06 12.71
Spot Silver 33.79 -0.05 -0.15 22.03
Spot Platinum 1671.70 -7.90 -0.47 20.01
Spot Palladium 650.90 -1.60 -0.25 -0.25
COMEX GOLD DEC2 1764.60 -0.40 -0.02 12.62 16872
COMEX SILVER DEC2 33.84 -0.15 -0.44 21.21 4552
Euro/Dollar 1.2866
Dollar/Yen 78.24
COMEX gold and silver contracts show the most active months
(Editing by Himani Sarkar)